If you’re nearing 60, you’re probably starting to think seriously about retirement. And one of the most important tools in your retirement toolkit is Social Security. But while most people understand that it’s a source of guaranteed lifetime income, very few understand how to optimize it. And that misunderstanding could cost you tens of thousands of dollars—or more.
In this post, I’m sharing five critical things you need to know about Social Security—especially if you’re planning to retire soon. Whether you’re thinking about when to claim, how to coordinate with a spouse, or simply trying to avoid common pitfalls, these five insights can help you build a stronger, more flexible retirement plan.
1. Know What You’re Optimizing For
Most people assume Social Security is just about income—simple as that. But in my experience working with hundreds of clients, it’s not quite so simple. Before you decide when or how to claim, you need to understand: what are you actually optimizing for?
There are four distinct strategies behind a smart claiming decision:
A. Longevity Insurance
If your goal is to minimize risk and ensure you don’t outlive your money, Social Security can act like longevity insurance. It’s one of the few income sources that’s guaranteed to last your lifetime—no matter how long you live. Delaying benefits until age 70 can provide a larger income floor, which becomes especially powerful if you live into your 90s or beyond.
B. Protecting a Spouse
If you’re married, optimizing for just your own benefit might not be enough. For example, if you’re the higher earner and your spouse is less involved in the financial plan—or has a lower benefit—your decision impacts not just you, but your surviving spouse. By delaying your benefit, you’re also increasing the survivor benefit they could receive if you pass away first.
C. Legacy Planning
Social Security doesn’t pass on to your children or grandchildren—it ends when you and your spouse pass away. If legacy is a priority, some people choose to collect earlier and use those benefits to invest or save in other vehicles that can be passed on. It’s not for everyone, but it’s a strategy worth considering in the broader context of your financial plan.
D. Investment Returns
Often overlooked is the opportunity cost of delaying. If you retire at 62 but wait until 70 to collect benefits, you’re likely drawing down from your own portfolio in the meantime. That reduces the capital available to grow and compound. In other words, you’re trading portfolio growth for a bigger Social Security check later. So part of your decision comes down to: where do you expect the best return? Social Security or your investment portfolio?
2. Spousal and Survivor Benefits Are a Game Changer
This is one of the most misunderstood—and most powerful—aspects of Social Security. If you’re married (or were married for at least 10 years), spousal and survivor benefits can significantly impact your retirement income strategy.
Let’s say you’re the higher earner, and your spouse stayed home or earned less. They’re still eligible for a spousal benefit of up to 50% of your full retirement age (FRA) benefit. So if your FRA benefit is $3,000/month, your spouse could receive up to $1,500/month—even if their own benefit is minimal.
But here’s the key: you must be collecting your benefit for them to claim theirs. So if you delay until age 70, your spouse may have to wait to access their spousal benefit.
Survivor Benefits Go Even Further
If you pass away first, your surviving spouse can step up to receive your full benefit—including any delayed retirement credits. So if your benefit at 70 is $3,500/month, that full amount would pass to your spouse as a survivor benefit—replacing the smaller spousal benefit they had before.
Even divorced spouses may be eligible if the marriage lasted at least 10 years. These benefits don’t affect your own or your current spouse’s benefit, either. It’s an important point to remember when considering all available options.
3. Yes, Social Security Can Be Taxed
Contrary to what some people believe, Social Security is subject to federal taxes—though it is taxed more favorably than many other income sources.
Here’s what you need to know:
- Up to 85% of your benefit can be included in your taxable income, depending on your provisional income (which includes Social Security, IRA distributions, and certain other income).
- That means at least 15% of your benefit is always tax-free.
- Most states don’t tax Social Security, but some do—so it’s important to check your state’s rules.
The New $6,000 Senior Deduction
A recent tax law introduced an additional $6,000 deduction for taxpayers age 65 and older. It’s in effect for tax years 2025 through 2028 and can help offset the taxes you may owe on Social Security.
While Social Security isn’t tax-free, a good financial plan can help minimize how much of it you actually pay taxes on. Through strategic use of Roth withdrawals, investment account drawdowns, and timing, it’s possible to structure a more tax-efficient income in retirement.
4. Working While Collecting Can Reduce Your Benefits
This is where a lot of people accidentally sabotage their retirement income. If you start collecting Social Security before your full retirement age (currently 67 for most), and you’re still working, your benefit could be temporarily reduced.
For 2025, if you earn more than $23,400 (in wage income), you’ll lose $1 in benefits for every $2 you earn above that limit. That’s a significant reduction.
Here’s the good news: once you reach full retirement age, the reduction goes away—and you’ll get credit for the months your benefit was withheld, which will slightly increase your benefit over time.
But be careful: I’ve worked with clients who retired at 62, got bored, went back to work at 64—and had their benefits offset or delayed without realizing it. Know the rules, and make sure your decision to collect fits with your work plans.
5. You Don’t Have to Collect Just Because You Retire
This is a big one. Many people assume that as soon as they stop working, they must start collecting Social Security. But that’s not true.
Even if you’re retired, your Social Security benefit continues to grow until age 70. Every year you delay after full retirement age, you receive delayed retirement credits—an 8% increase per year.
So, what do you live on in the meantime? That’s where a well-coordinated withdrawal strategy comes into play. You might use:
- Cash savings
- Roth IRA withdrawals
- Traditional IRA distributions
- Pension income
- Taxable investment accounts
By coordinating these income sources smartly, you can reduce your tax burden, keep your Social Security growing, and potentially end up with more money overall—both now and later.
Final Thoughts: Maximize Your Benefit with the Right Strategy
Social Security may seem like a simple government benefit, but for those who take the time to understand it, it can become one of the most powerful tools in your retirement income plan.
The biggest mistake I see isn’t choosing the “wrong” claiming age—it’s not thinking strategically about what you’re optimizing for. Once you know whether your priority is risk management, legacy, investment growth, or spousal protection, the right claiming strategy starts to come into focus.
This isn’t about chasing every dollar—it’s about building a sustainable, confident retirement plan that supports your life, your values, and your goals.
If you’re feeling uncertain about how Social Security fits into your retirement strategy, reach out to an advisor you trust. There’s no one-size-fits-all answer—but there is a best-fit answer for you.
The information presented is for educational and informational purposes only and should not be construed as personalized investment or financial advice. The content discusses general retirement planning strategies and is not intended to recommend any specific course of action for any individual.
Social Security claiming strategies involve a number of variables, including life expectancy, portfolio returns, tax considerations, and personal circumstances. Decisions regarding Social Security benefits should be made in consultation with your financial advisor, taking into account your full financial picture.
Examples provided are hypothetical and for illustrative purposes only. They do not reflect any specific client situation and should not be relied upon for investment decision-making. Past performance of investments is not indicative of future results. All investing involves risk, including the potential loss of principal.
Root Financial Partners, LLC provides tax planning as part of its financial planning services. However, we do not provide tax preparation services, represent clients before the IRS, or offer legal advice.
Clients should consult their CPA or attorney before implementing any tax or legal strategies discussed. Nothing in this video should be interpreted as a recommendation to take a specific tax position or legal action.
This content may include discussions around advanced financial planning strategies such as Roth conversions, backdoor Roth IRAs, tax loss harvesting, charitable giving, estate planning tactics, or Social Security claiming strategies. These concepts are general in nature and are not personalized advice. Actions related to these strategies may trigger tax consequences or legal implications. Always consult with your CPA or attorney to assess suitability based on your personal financial circumstances.
Suitability for these strategies depends on your individual tax situation, income, age, investment profile, estate plan, and other factors. Actions related to these strategies may trigger tax consequences or legal implications. Always consult with your CPA or attorney to assess suitability based on your personal financial circumstances.